Industrial Land Use Trends

Anita MorrisonPartners for Economic SolutionsOctober 31, 2013

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Industrial Land Uses Production Bakeries, coffee

roasters, printers, woodworking, custom furniture

Distribution Repair Auto repair Appliance repair

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Industrial Land Uses Contractors Landscapers Home improvement

contractors Retail Countertops, carpets Entertainment Gymnastics Paintball

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The Importance of Industrial Districts

Entrepreneurs and small businesses Arts and arts-related

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The Importance of Industrial Districts

Convenient access to repair and other services

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The Importance of Industrial Districts

Entry-level and vocational jobs

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The Importance of Industrial Districts

Public sector operational needs Tax revenues

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Zoning Issues for Industrial Districts

Market pressure to convert use Speculation raises land values Residential encroachment impedes operations

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Industrial vs. Flex Space

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Industrial Warehouse/

distribution Manufacturing

Flex Office in front Warehouse,

assembly in back

Labs

Space Trends

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Major declines in Construction pace Absorption pace Occupancy rate

Industrial Space-Current Conditions Industrial Flex

Total Inventory (Sq. Ft.) 14,306,000 11,701,000

Occupied Space 13,196,000 10,331,000

Percent Occupied 92.0% 87.6%

Annual Absorption

1993-2002 141,000 247,000

2003-2012 -2,000 -6,000

Rent ($/Sq. Ft. NNN) $11.22 $14.14

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Absorption was greatly affected by the Great Recession; now recovering Low occupancy rates relative to healthy rate of

92% to 95%

Industrial and Flex RentsJurisdiction Industrial Rent Flex Rent

Montgomery County $11.22 $14.61

Prince George’s County $6.60 $9.01

Frederick County $5.72 $11.22

Fairfax County $8.97 $12.89

Arlington County $11.44 $21.90

City of Alexandria $9.75 $13.95

District of Columbia $10.52 $12.21

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Montgomery County rental rates are higher than those of all competitive jurisdictions, except Arlington County

Third Quarter 2013 triple net rents per square foot, excluding utilities, taxes, insurance and maintenance.

Regional Industrial Trends

Last decade saw a major shift to second-ring suburbs Charles, Frederick, Loudoun, Prince William, Manassas and

Manassas Park Away from DC and first-ring suburbs Montgomery, DC, Prince George’s, Fairfax County, Arlington,

Alexandria, Fairfax City and Falls Church

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Employment Trends

PDR industries under-represented in Montgomery County and regional economies

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Need for Industrial Space

Declining industrial employment does not eliminate the need to preserve industrial land Lower employee densities Shifts among subsectors and businesses Replacement of obsolete space Locational mismatch Shifts of flex space to retail showrooms and office

uses County facility needs

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Large-Lot Single-Family Development2 units/acre

Industrial Land Use Patterns

Industrial Land Use Trends

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From 1993 to 2012, 144 properties with industrial uses changed to a commercial or residential use 566 acres removed from the industrial inventory Almost one-quarter of all industrial land

18Industrial Properties Converted to Other Uses 1993‐2012

Policy Recommendations No need to expand the supply of industrially

zoned land county-wide Important to preserve existing industrial space

in each of the county’s major subareasMaintain well-dispersed “pods” of industrial

land for services to residents, businesses and agenciesMaintain an adequate supply of municipal

support service sites

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Policy Recommendations Resist industrial land rezoning, particularly

down-county sites and sites near other industry Restrict uses to industrial-type operations not

well suited to commercial or employment zones Higher-value uses will push up land values and

push out industrial uses Allow some limited support retail and services

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Policy Recommendations Land within one-half mile of Metro stations

should be reserved for higher-density uses Quarry land can be transitioned to other more

intensive uses without negative economic impacts due to limited need for land zoned for heavy industry

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Key Zoning Area Issues Brookville Road area in Lyttonsville Howard Avenue in Kensington Parklawn/Twinbrook Critical to providing convenient access for

customers

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Protections in the Zoning Rewrite Only educational uses are trade, artistic and

technical schools Retail/service uses Building and food service supply Home design and furnishings Computer programming and software sales Wholesale trade to industrial and commercial

users No hotels Excludes live/work in Industrial Light,

Industrial Moderate and Industrial Heavy zones

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Protections in the Zoning Rewrite Limits ancillary retail/service, office and

restaurant use to 35 percent of the mapped FAR Allows for hybrid operations (e.g., office,

warehouse, sales and production) Provides on-site amenities for industrial users and

a better mixed-use environment Allows large recreational and entertainment

facilities up to 1,000 persons

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Buffering Provisions 30- to 50-foot landscaped buffer between

industrial and residential uses Tough on smaller sites Zoning does allow for alternative compliance

methods

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Policy Recommendations Any rezonings should consider impacts on

existing businesses Rezone close in time to anticipated development

to avoid speculation 50-foot height limit is compatible with needs of

modern warehousing FARs of 1.0 to 2.5 greatly exceed what is likely to

be developed

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Conclusion County is well served with industrial land given

the nature of the local economy Good stewardship of the county’s resources

demands an optimal mix of land and development Recognize the role played by industrial districts Protect remaining industrial land in developed

portions of the county

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